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Jan 17, 2013

ACCC gives expected interim authorisation to Qantas-Emirates deal

The ACCC interim authorisation follows hot on the heels our our earlier report of sales of fares under the agreement being phrased to avoid using the Emirates word.


For the record, here is the main part of the ACCC statement granting interim authorisation to the Qantas-Emirates deal.

The Australian Competition and Consumer Commission has granted interim authorisation, subject to a condition, for the proposed alliance between Qantas Airways Limited and Emirates. Under the alliance, the two airlines will cooperate on passenger and freight operations across their networks.

The applicants plan to undertake certain preliminary steps to prepare for the proposed implementation of the alliance in April 2013. This work relates to joint sales and pricing strategy, joint marketing, system integration and testing, customer handling, and scheduling and capacity coordination.

“The ACCC is allowing Qantas and Emirates to start implementing their alliance because of the long lead time required to market and sell tickets before the commencement of long-haul services,” ACCC Chairman Rod Sims said.

“In its draft determination issued in December the ACCC formed the preliminary view, after conducting a detailed assessment, that the public benefits resulting from the alliance are likely to outweigh the public detriment which may result through its effect on competition where Qantas and Emirates offer overlapping services. In most regions, this detriment is likely to be mitigated by a number of factors, including continued competition from a number of established airlines.”

“Under interim authorisation, the applicants will be able to commence activities that will enhance the product and service offerings to Qantas and Emirates customers. In making its decision, the ACCC has accepted written assurances from the parties that should the ACCC ultimately decide not to allow the alliance to go ahead, the airlines will accommodate consumers’ bookings.”

“The ACCC raised concerns about the potential impact of the alliance on the overlapping routes between Australia and New Zealand. The ACCC is concerned that the alliance may have an increased ability and incentive to reduce or limit growth in its capacity in order to raise airfares. Therefore, the ACCC is granting interim authorisation on the condition that the applicants do not engage in the conduct for which authorisation is sought in relation to services between Australia and New Zealand,” Mr Sims said.

The ACCC may review its decision on interim authorisation at any time and it should not be taken to be indicative of whether or not final authorisation will be granted.


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